CMO Minute: How Political Ads Rescued 2020 Advertising

CMO Minute: How Political Ads Rescued 2020 Advertising

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By: Jim Poh, VP of Communications & Media Strategy and Natalie Panciera, Media Supervisor

2020 has been a difficult year for just about every person, industry, company, and the world. The advertising industry is no exception. Despite increases in media audience size, as people have been home more often, ad spending has been decimated by Covid-19. Ad spending in January and February was flat versus 2019, but since March 2020, total ad spend is down 22%, around $1.8 billion. Losses were especially sharp in print media (newspaper -31%, magazine -19%) and local media (radio -21%, TV – 29%).

However, national TV ad spend is ahead of last year, bolstered by some unexpected national spend for presidential candidates. About 82% of the extra $135MM spent in National TV YTD came from the presidential campaigns. The campaigns flat out rescued local TV spending for the first half of the year, which would have been down by two thirds without candidate money, and political spending has not even begun in earnest. In 2016, over half of the presidential campaign dollars were spent from September through election day in early November.

Certainly, there has been a drop in ad spending that has been offset to an extent by political advertising even though there are more ad impressions out there for sale. Local advertisers in low political markets may find some good bargains, but for national TV advertisers, the presence of political dollars and scarcity mentality should keep pricing pressure high, offsetting increased supplies. Print and digital advertising should be comparatively good values for them.

Of course, this is all somewhat contingent on the virus and the public reaction to it. If people retreat to their homes in big numbers again from a second wave of the virus, a myriad of local businesses will shut down ad spend. However, we predict in Q4 that businesses will be trying to make up lost time and drive pricing up as audiences decrease. And with a ramped up political climate quickly followed by the heaviest retail period, Intermark Group highly recommends finalizing buys sooner rather than later to lock in rates and avoid heavy preemptions.

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